Definition: The amount of equity a company has, which is the difference between
its total assets and total liabilities.
Your net worth is just as important as your income. Every now
and then, you should sit down and tally up your personal assets and
liabilities, just as you do with your business, to figure out where
you stand. Enter actual or estimated market values on each line and
total just as you would a balance sheet.
You can grow your net worth through some combination of
decreasing liabilities and increasing assets. Why should you care
if your net worth grows? One common reason is retirement planning.
Simply put, the more assets you have, the more comfortable your
retirement will be. You may also need a high personal net worth to
buy a business, pursue some types of investments, purchase a second
home, pay for a child's college education, or for other
purposes.